Ottawa to impose Ontario carbon tax when Ford scraps cap-and-trade

Ontario premier-designate Doug Ford smiles as he enters the room to speak with the media after winning the Ontario Provincial election in Toronto, on Friday, June 8, 2018. THE CANADIAN PRESS/Nathan Denette

TORONTO— Ontario premier-designate Doug Ford says on the day his government is sworn in he will cancel cap-and-trade, and already Ottawa is promising that move will lead to a federal carbon tax instead.

“As of June the 29, the cap-and-trade, the carbon tax they’re gone, they’re done,” Ford told reporters Friday morning. “This will mean relief at the pumps.”

Ending the province’s price on carbon was a key part of the Progressive Conservative leader’s campaign pledge to cut gas prices by 10 cents. Cap-and-trade puts a cap on how much big polluters can emit and incentivizes companies to reduce emissions by forcing them to purchase allowances if they go above their cap.

The incoming government says the program added 4.3 cents to the price of gas in Ontario, so removing it will bring prices down. However, Ottawa has already pledged to impose its own carbon tax on provinces that don’t bring in their own. And companies have already bought more than $2 billion in allowances to participate in the market with California and Quebec.

Brought into force in January, the market was first announced in 2015. In Ontario, electricity importers and fuel suppliers are among the companies that are required to take part in the system.

The agreement allows for any jurisdiction to pull out of the market, but it sets limits on when. Specifically it says Ontario is expected to give California and Quebec 12 months notice if it wants to bail on the shared carbon market — and it can only leave at the end of a compliance period. The current one wraps up at the end of 2020.

Ford didn’t explain why his government wouldn’t follow the terms in the agreement, instead saying “companies are going to be quite happy that they don’t have to pay for this.”

When it was pointed out that companies have already shelled out the cash he said, “They’re going to be quite happy that they won’t be paying in the future.”

“What we’re doing is putting money back into businesses pockets, back into families’ pockets and I think people will be pleased.”

Ottawa to impose carbon tax on Ontario

The federal government is already warning that any move by Ontario to scrap its carbon price will lead to a federal carbon tax instead.

“On Thursday, Bill C-74 passed the Senate. It includes new supports for families, tax cuts for small businesses, and a federal standard for pricing pollution that provinces must meet. Ontario’s current pollution pricing system meets the federal standard. If the new government changes or eliminates its system, that assessment may change and the federal price on pollution would apply.”

She also disputed Ford’s claim that a price on carbon has no impact on Canada’s climate change goals.

“Pricing pollution works. Ontario is one of four provinces with a price on pollution, and those four provinces currently lead the country in economic growth,” Thériault said.

Ford said he would instruct his incoming attorney general to fight Ottawa’s carbon tax with “every power at the government’s disposal.” The Tory’s campaign platform pegged the cost of a court challenge at $30 million.

“We will officially challenge the federal government carbon tax on Ontario families. Because the cap-and-trade and carbon tax does nothing for the environment. All it does is hurt small businesses and hurt families,” Ford said.

It’s welcome news to Saskatchewan, which until now was the only province fighting Ottawa’s price on carbon. Premier Scott Moe tweeted “Saskatchewan is pleased to have another provincial ally in fighting this punitive, ineffective tax on our people.”

Ford dismisses risks of lawsuits

Asked if he was opening the province up to lawsuits Ford said, “I don’t believe so. We’ve looked into that and we don’t see a problem with that.”

Pointing out that companies have already started buying allowances for future years NDP MPP-elect Peter Tabuns asked whether Ontario would be on the hook to reimburse those firms.

“As we saw with the Liberals’ cancelled gas plants scandal, costs can climb very quickly when you start ripping up contracts,” he said in a statement.

When asked at the press conference about reimbursing companies, Ford didn’t directly answer the question but said “they’re going to see immediate relief.”

“Everyone’s going to see it because we’re going to reduce gas prices.”

Environmental Defence issued a statement calling the cancellation of cap-and-trade a “bad idea for many reasons,” maintaining that Ford’s move invites lawsuits.

“Cap-and-trade is the lowest cost way for Ontario to comply with Ottawa’s carbon pricing plan. Ontario businesses are literally invested in cap-and-trade, having bought over $2.8 billion in permits. The Ontario government will need to find billions of dollars to buy back those permits, or risk being sued,” the statement said.

In a statement, Ontario Green Party Leader Mike Schreiner called the Progressive Conservatives’ decision “reckless” and said it would send “Ontario backward on addressing climate change, the greatest crisis facing our planet.”

He said to do so in haste and without a proper plan is even more irresponsible.

“It will cost jobs and money, and have negative economic implications for our province.”

Ford said scrapping the program would require an order in council on June 29, as well as legislation. He didn’t clarify what part requires legislation and declined to give a date for the return of the legislature.

California Governor Jerry Brown and Quebec Premier Philippe Couillard could not be reached for comment.